WOB Road Map for Gender Diversity on Australian Boards

Prepared by Claire Braund and Ruth Medd
Directors, Women on Boards
October 2008

Download the full report alt (29 KB PDF)

Summary

The Women on Boards (WOB) Road Map for Diversity provides practical strategies for organisations and their chairs to increase numbers of women on their boards and in senior executive roles. The strategies are simple and easy to implement. All they require is a commitment from chairs and boards to increasing gender diversity as a priority issue.

The 2008 EOWA Survey showed that the numbers of women on boards and in senior executive roles on top ASX 200 Companies Australia was declining. This loss of diversity should be of serious concern to a marketplace already affected by a massive global downturn.

Many reasons will be given for the statistical decline, including the old argument of women not wanting to take on these jobs or not having the required ‘experience’, but the facts are:

  • Women find it difficult or are not able to break into the right networks.
  • Cultural norms actively protect the status quo at the top.
  • Those with the power to ‘gift’ or influence a directorship or senior role tend not to look beyond traditional sources to fill positions.

ASX companies are a high priority because they are the benchmark for economic activity and are the worst performing sector in relation to women in leadership positions. The challenge of improving women’s participation is increasing as the skills shortage bites and resource and resource services companies make up more of the new entrants to the ASX200.

The participation of women in leadership roles will reduce further unless serious, positive and urgent action is taken.

The Statistics – Female Directors

  • 8.3% of ASX200 companies and a lesser percentage of all listed companies
  • 38% of the membership of Government boards and committees Australia wide.
    SA is leading the government sector on 45 %.
  • 30% of directors, trustees, council members, committee members in the top entities by revenue in the third sector (not for profit, social enterprise & public benefit organisations)

The Statistics – Female Executives

  • 10.7% of senior executive roles in ASX200 companies. Given that this is the natural source of ASX directors it is not a sufficient pipeline to improve women’s participation.
  • 5% of the total top earners in ASX200 companies.
  • 13% of top earners in companies with 2+ women on their boards.
  • Top female earners in ASX200 companies earn 58% of male top earners for comparable roles. By contrast, all women earn 84 % (ABS 2007) of Average Weekly Earnings.

Strategies for Companies

1.  Actively seek out women who are future directors

  • Establish arrangements to increase the pool of women candidates known to chairs and directors, so they become available for selection when opportunities arise.
  • Adopt an ‘active looking plan’ - rather than the ‘bumped into a mate’ approach.
  • Seek input from other sources and require search consultants to provide a list of emerging women directors and emerging senior executives as part of any recruitment process.

2.  Encourage and support women who are potential future directors

  • Invite women to events and activities that will assist them into the networks that matter (eg corporate boxes at sports events) and look after them.
  • Host an annual ‘emerging leaders’ event and invite external and company women.
  • Open subsidiary and joint venture directorships to a transparent/open process and earmark some of the directorships for women.
  • Support and encourage women to join a board as a part of their professional development.

3.   Ensure a transparent selection process

Ensure the director selection process is formal and transparent as per Recommendation 2.4 of the ASX Corporate Governance Principles and Recommendations (August 2007):

  • Advertise vacancies more widely and in sectors where women are more prevalent.
  • Broaden selection criteria beyond operational experience in a particular industry and financial and legal skills.
  • Require at least one serious woman candidate to be present on every short list.

4.  Gender reporting

  • Institute a top-level pay audit and report the results by gender as well as level.
  • Give additional focus by having at least one woman on the remuneration committee.

5.  Enhanced KPI reporting

Add diversity indicators to senior management KPIs to ensure the issue gets traction. Suggested indicators are:  

  • Proportion of women in a company business unit at each level of employment
  • Pay levels and attrition rates of men and women in comparable positions
  • Remuneration of women top earners compared to male top earners

Strategies for Regulators, Governments & Industry Associations

  • Modify ASX Corporate Governance Principles and Recommendation 2.4 to qualify ‘appropriate range of skills and experience’ with examples that include diversity in board membership.
  • Federal Government to require boards of organizations it funds through matching R&D or other contributions to set and meet diversity KPIs.
  • State Governments to report annually on their own boards and committees as well as ASX companies registered in their state.
  • Industry Associations to institute programs and make representation to the ASX and Government on the need for more women in public company life.